Is the U.S. the Highest Taxed Nation in the World? | Committee for a Responsible Federal Budget (2024)

FAQs

What is the highest taxed country in the world? ›

The long-troubled West African country, Ivory Coast, has the highest income tax rate in the world. People living there are giving away a whopping 60% of their income to the government.

In 2021, taxes at all levels of US government represented 27 percent of gross domestic product (GDP), compared with a weighted average of 34 percent for the other 37 member countries of the Organisation for Economic Co-operation and Development (OECD).

The United States ranked 31st¹ out of 38 OECD countries in terms of the tax-to-GDP ratio in 2022. In 2022, the United States had a tax-to-GDP ratio of 27.7% compared with the OECD average of 34.0%. In 2021, the United States was ranked 32nd out of the 38 OECD countries in terms of the tax-to-GDP ratio.

The top 10%, with incomes of at least $169,800, pay about three-quarters of the nation's tax bill, the analysis found. Although most Americans believe the middle class bears the heaviest tax burden, it's actually the top 1% who pay the highest federal tax rate, at 25.9%, the Tax Foundation analysis found.

While the tax burden varies quite widely between both US states and Canadian provinces, in general, the US has significantly lower taxes overall than Canada does, albeit at the expense of less generous social welfare benefits - most glaringly being the (IMHO) embarrassing lack of a universal healthcare system.

Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.

Are US taxes higher than in Europe? As for who pays more in taxes, it depends on a particular country. The US has higher rates compared to Eastern European countries (Poland, Bulgaria, Romania, Hungary), but lower rates in contrast with Western European states (France, Germany, Denmark, and the UK).

Minnesota, New Jersey, Delaware, Illinois and Florida are least dependent on the federal government. These states all contribute multiples more to the federal government than they receive, with residents paying at least $5 in taxes for every $1 in direct support received from the federal government.

Globally, income taxes are a source of government revenues. Some countries do not impose an income tax on their residents or citizens. To fund operations, countries without income tax rely on other types of taxation, such as VAT and property tax.

The United States has the eighth highest income tax rate among the countries in the Organization for Economic Cooperation and Development, or OECD.

What country has the fairest tax system? ›

For the last 10 years in a row, Estonia has had the best tax code in the OECD, according to the Tax Competitiveness Index 2023. Estonia's transparent and straightforward tax system attracts investments with no corporate income, capital, or property transfer taxes.

Progressive taxes take more from those able to pay more. Because this method is based on the ability to pay, it is considered the fairest means of taxation.

Who Does Not Have to Pay Taxes? Generally, you don't have to pay taxes if your income is less than the standard deduction, you have a certain number of dependents, working abroad and are below the required thresholds, or are a qualifying non-profit organization.

Unsurprisingly, the states with no state income taxes at all ended up scoring pretty highly. Those eight states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

In 2022, Canada had a tax-to- GDP ratio of 33.2% compared with the OECD average of 34.0%. In 2021, Canada was also ranked 23rd out of the 38 OECD countries in terms of the tax-to-GDP ratio.

While some countries may have lower Income Tax rates, their reliance on indirect taxes can result in a similarly high overall tax burden. The UK's combination of both high direct and indirect taxes contributes to its status as one of the highest taxed countries.

As today's map shows, only three countries levy net wealth taxes in Europe—Norway, Spain, and Switzerland. France and Italy levy wealth taxes on selected assets but not on an individual's net wealth per se.

Taxes & Public Spending. When banks are allowed to create a nation's money supply, we all end up paying higher taxes. This is because the proceeds from creating new money go to the banks rather than the taxpayer, and because taxpayers end up paying the cost of financial crises caused by the banks.